The Libertarian

Vin Suprynowicz

IN NEW JERSEY, THE SUICIDE SQUEEZE

Relax: New Jersey legislators agreed on a state budget Thursday, finally caving in to the squeeze play of Democratic Gov. Jon Corzine.

How did the governor, who in his 2005 election campaign said he did not plan to raise taxes, respond to the delegates’ failure to approve his annual budget (up 9.2 percent) and his requested state sales tax hike (up 16 percent, to a 7 percent rate), by the constitutional deadline of July 1? Why, he merely “shut down state government” for six days -- concentrating on those functions whose absence would best antagonize the citizens.

Were state parks and beaches “swim at your own risk” once the state-employed lifeguards were sent home? No, of course not. They were simply locked up and closed. Over the sweltering Fourth of July weekend. See the pattern?

Closed, too -- as of 8 a.m. Wednesday -- were Atlantic City’s 12 casinos. Unlike Nevada, you see, where regulators visit gaming properties only when necessary for an inspection or an enforcement action, New Jersey’s “jobs-for-every-nephew” system requires state regulators (there are nearly 200 of them) to be on site in every casino and racetrack all the time, like USDA inspectors at a slaughterhouse.

The casino closures threw an estimated 20,000 people out of work. Many in Atlantic City had thought such a move impossible, given that the gaming palaces generate a $1.1 billion payroll and contribute $1.3 million per day to the state budget. Surely the folks in Trenton wouldn’t shoot themselves in the foot to that extent.

But the skeptics were wrong. Shares of gaming companies with interests in New Jersey -- including Las Vegas-based Harrah’s Entertainment and Boyd Gaming Corp. -- immediately started to decline this week based on concerns over lost income.

But not to worry. Lawmakers caved in, and the deal to “close the state’s $4.5 billion budget gap” will include a $1.1 billion-a-year sales tax hike, a high-ranking Statehouse official told The Associated Press.

So now everything’s fine ... or is it?

There just might be a lesson here for Nevada’s gaming industry. That industry, as a legal and above-board enterprise, was essentially invented in Nevada, some 70 years ago. Although it was understood from the start that some reasonable state regulation would be good for all (assuring tourists that the games were on the up-and-up), the industry prospered under the traditionally low-tax, laissez faire environment of the Silver State, whose statute books also allowed (still do, actually) legalized brothels, “quickie” marriage and divorce, fireworks, cigarette machines, 24-hour liquor service, the open carry of firearms -- a whole plethora of discretionary adult activities which have been progressively taxed or regulated out of existence in the nanny-state enclaves to the east and west.

Do the chieftains of today’s Nevada mega-resorts still routinely endorse and support the candidates most likely to preserve that low-tax, low-regulation environment?

Less and less. The “deal with the devil” in recent years seems to have been based on the assumption that higher taxes and a busier nanny state were inevitable, so the most pragmatic thing to do was to support not the candidates who best represented Nevada’s old entrepreneurial spirit, but rather those peddling schemes for vast new tax hikes to fund vast new bureaucracies, so long as these new tax schemes “spread the burden” among other victims.

Where does that road lead? It leads to the situation gamers now face in New Jersey, where their enterprises can be shut down on a political whim, by kleptocrats who have rendered their state 49th in the nation for “business friendliness” (after only neighboring New York), saddling their residents with a 9 percent state income tax, the fourth highest burden of state and local taxes ($4,557 per capita), and the highest property tax burden in the nation, at $2,170 per person.

Is it any wonder more people are now leaving New Jersey than are being born there? Does that sound like an ideal environment in which to risk more stockholder money? Is that where Nevada wants to head?

“New Jersey voters keep electing these tax-and-spendaholics,” the Wall Street Journal concluded, Thursday, “so we suppose they get what they deserve.”